US Intrafirm Trade: When MNCs Rule the World?

Sometime ago I read an exceptionally bad anti-globalization book by David Korten entitled When Corporations Rule the World. Ridden with factual errors such as the corporate revenues versus GDP apples-and-oranges fallacy, it was, to say the least, a laborious read. The anti-globalization movement claims to be environmentally friendly unlike the folks they criticize, but all I can say is that I am hugely appalled that so many trees were cut to print this amateur nite rubbish. At any rate, I was reminded of this amateurish screed while reading the latest summary statistics from the WTO's annual International Trade Statistics report for 2009.

The above chart caught my eye depicting the growing share of intrafirm trade in US service exports. America is, of course, by far the world's largest exporter of services. What is noticeable here though is that while the ultimate share of intrafirm trade in US service exports is growing, the base it starts with is relatively low. Trade is certainly not yet becoming the exclusive domain of monolithic corporations divvying up their operations worldwide for its inevitable corporate conquest. Certainly, it's nothing to set the anti-globalization set afire, though they're welcome if they want to give it a try. When Intrafirm Services Trade Rules the World doesn't have the same snap IMHO.

Without further ado, here is the accompanying the writeup:

The globalization of business and the firms’ increasing ownership of different stages of the production process have increased the role of intermediate goods in merchandise trade over the last decade. A similar fragmentation of production has been emerging in the field of services. The United States has recorded an increasing share of trade between multi-nationals and their majority-owned foreign affiliates, growing from 21.5 per cent to more than a quarter of its total trade (27.5 per cent) in 2007 (covering only nonbank affiliates, and excluding transportation services and travel).